Net sales totaled $161.7 million, up from $139.2 million the prior year. According to Cavco, the increase came from the acquisitions of Chariot Eagle, which happened March 30, and Fairmont Homes, which happened May 1. “The increase was largely from homes sold by the new operations acquired during the quarter and also from higher overall sales volume.”
That helped offset drops in pre-tax and net income compared to the same quarter a year ago. “The net decline was directly caused by the manufactured home insurance subsidiary’s high claims volume generated by record setting storms in Texas. While claims activity typically spikes in April and May, a prime season for storm activity in the area, the severity of the hail and wind storms and the damage to insured homes were considerably greater than anticipated,” the company said in its report. “According to data from the National Oceanic and Atmospheric Administration, Texas rainfall for the first 6 months of 2015 was 80% higher than average, marking the wettest year-to-date ever measured in the state. Losses from these catastrophic events were somewhat mitigated by reinsurance contracts in place.”
Pre-tax income was $8.6 million, down by $300,000, and net income was $5.4 million, down by $400,000 from the same period a year ago.
Joseph Stegmayer, chairman, president and CEO of the Phoenix-based company, said, “During the quarter, Cavco began folding the Fairmont Homes and Chariot Eagle operations into the company. We continue to be excited about the opportunities these businesses bring to our family of companies and expect future revenue and earnings growth as the integration process continues.
“The financial-services-segment’s earnings were significantly impacted this quarter by unpredictably high insurance claims activity. However, the business has been a solid performer for the company over time despite occasional periods of high claim experience. The home-insurance subsidiary continues to be a good business for the overall organization and one that is complementary to our factory-built housing operations.”
Stegmayer concluded, “The company has expanded to provide a broad range of systems-built housing solutions in most of the key market regions in the United States and Canada. Meanwhile, Cavco has maintained a solid financial structure to support continued growth. While the manufactured housing industry is still faced with challenging economic and regulatory conditions, we believe that our organization is well positioned in the current environment as well as for the longer term.”